Where do you find the money to bridge the shortfall between paying contractors weekly and receiving the balancing payment from clients at a later date?

First ask if you need the finance?

If you’re placing contractors in the professional market or looking to grow with speed, then unless you’ve an untapped well of money close to hand, you’ll need a cash lifeline.

Be it a fledgling start-up, an established agency looking to grow their book, or a perm agency venturing into contract for the first time, they’ll all need a secure pipeline to finance to counter the downturns in cashflow.

To put it into perspective; the average agency that set-up in 2013 was already owed in excess of £100,000 from late payments by the close of 2014.

Despite accepted payment terms between clients and agencies usually being agreed around 30 days, most agencies receive payment 42 days after they raise an invoice, with a significant number of agencies waiting over three months for larger businesses to cough up.

Then ask what your options are?

Agencies have traditionally turned to either invoice discounting or invoice factoring. Two forms of lending that advance money to agencies from their unpaid invoices.

These financiers are essentially buying your debt and charging a fee for advancing you the money in the interim.

Invoice Discounting:

By allowing agencies to borrow against their unpaid invoices they release cash that would otherwise be tied up with clients, and provide them with a secure line to pay contractors.

The amount you can borrow against your invoices depends on both your provider and your circumstances, but usually it lies between 80 and 90% of the value. However, a number of additional factors affect the lending terms with traditional financiers.

This form of finance lays the responsibility of credit control, administering timesheets and collecting payments at the feet of agencies.

Invoice Factoring:

Factoring provides the same finance usually capped below 80 and 90% of the invoice value, but differs in that the responsibility around credit control is managed by the factoring company.

Despite being the traditional route for funding contractors for the last 30 years, neither of these solutions are designed exclusively for recruitment and fail to accommodate the flexibility and understanding which is needed for fast growth agencies and start-ups.

There’s often a large number of additional fees on top of the base price they market, including re-factoring costs, interest on lending, late payment charges and restrictions on actually accessing the cash from your invoices.

See what you should be asking before you secure a finance agreement.


As the only provider to be designed exclusively for the recruitment industry by those that have a background in it, we fully understand the financial needs of agencies.

Sonovate allows agencies to borrow against their unpaid invoices, but provides the additional 20% of profit from invoices that the banks can’t. This provides agencies with the headroom to not only pay contractors but scale quickly.

It’s a far more flexible financier that fits seamlessly with agencies of all sizes, allowing them to choose who they fund, when they fund, and asks them to only pay when they do.

Sonovate goes a step further, then invoice finance by using the latest cloud technology platform to remove all the work involved in contract administration, so that agencies can dedicate all their time to billing assured that Sonovate is handling the rest.

See for yourself?